Fitch Rates Baltimore Gas and Electric's New Secured Debt Indenture 'A-'

NEW YORK--(Business Wire)--
Fitch Ratings has assigned an indicative rating of 'A-' for expected debt
issuance under a new secured debt indenture by Baltimore Gas and Electric
Company (BGE). BGE received financing authority from the Maryland Public Service
Commission (MPSC) permitting issuance of up to $1.5 billion of debt whether
unsecured or secured to finance ongoing capital investment, to refinance debt or
for other general corporate purposes necessary to support BGE's utility
operations in the coming years. When issued, new secured bonds under this
indenture will rank superior to BGE's outstanding senior unsecured notes and
debentures rated 'BBB+'. BGE's Issuer Default Rating (IDR) is 'BBB'. The Rating
Outlook is Stable.

Bonds issued under the new indenture will be secured by a first lien on
substantially all of BGE's utility electric distribution equipment and fixtures
but not its electric transmission or gas distribution assets. As of the end of
March 2009, BGE estimated that there was approximately $2.1 billion of eligible
collateral at book value in the electric distribution category, against which
BGE could issue new secured bonds up to about $1.35 billion. Fitch does not
expect that BGE will issue the full potential amount of secured debt at once; in
all likelihood, issuances under the new indenture would take place over a period
of years.

Summary terms of the new indenture are:

--Secured bonds may be issued from time to time in an aggregate principal amount
not exceeding the sum of: 65% of the cost or fair value to BGE (whichever is
less) of electric distribution property additions: and the aggregate principal
amount of retired secured bonds, as defined; and cash deposited with the
trustee.

--Negative Covenant: BGE may not merge or consolidate with any other entity
unless the surviving entity is BGE or explicitly assumes the outstanding debt.

--Events of Default include: failure to pay interest due, after 30 days; failure
to pay principal when due; standard events of bankruptcy, reorganization or
insolvency; failure to perform or breach of any covenant not cured 90 days after
receiving notice of the failure or breach.

In 2008, BGE repaid the remaining $119.7 million first mortgage bonds
outstanding under its prior first mortgage indenture. As of June 30, 2009, BGE
had $1.44 billion of senior unsecured debentures and medium-term notes
outstanding. Covenants in BGE's unsecured credit facility permit liens on BGE's
assets to secure obligations under an indenture and security agreement to a
maximum of $1.4 billion. There are no limits on secured debt in BGE's unsecured
debentures or medium-term notes. Ratings of BGE's outstanding senior unsecured
debt rating of 'BBB+' would not be affected by the issuance of new secured
bonds.

BGE's current IDR of 'BBB' reflects BGE's inconsistent operating cash flow over
the past several years and its ongoing exposure to political and regulatory
pressure that could produce weak cash flows and credit measures. Favorably, BGE
is protected from variations in power supply costs and volume variations by
purchased gas and purchased power recovery mechanisms, gas weather
normalization, and electric revenue decoupling. BGE plans to boost capital
expenditures over the next three years and may face a lag in the cash recovery
of some of its new investments. BGE's Stable Rating Outlook reflects the
improved business and financial risk profile and stabilized liquidity of its
parent Constellation Energy Group (CEG). CEG divested its London global
commodity trading business and Houston gas trading platform, reduced its risk
exposures, and substantially lowered its margin and collateral requirements.

Fitch has published a full credit analysis of Baltimore Gas and Electric dated
Aug. 26, 2009, that is available to subscribers on Fitch's web site at
'www.fitchratings.com'. The ratings and credit outlooks of BGE and its parent
Constellation Energy Group Inc. were revised on July 31, 2009 as described in
the rating action commentary 'Fitch Downgrades Constellation Energy and
Baltimore Gas and Electric; Outlook to Stable'.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, 'www.fitchratings.com'. Published ratings, criteria
and methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Ellen Lapson, +1-212-908-0504
Shalini Mahajan, +1-212-908-0351
Cindy Stoller, +1-212-908-0526 (Media Relations)
cindy.stoller@fitchratings.com

Copyright Business Wire 2009